Municipals bundle offshore investment

OFFSHORE: A growing number of Germany's 600 or so municipal energy utilities with electricity activities are taking the leap into offshore wind power, spreading the investment risk by banding together for individual ventures, or taking minority stakes in several ventures.

Many of the municipals are very small and have no or little electricity generation capacity, but are keen to achieve some independence from the four dominant electricity generators: RWE, E.on, Vattenfall and EnBW.

Sudweststrom Windpark bundles the investment contributions of 60 mainly municipal energy companies from Germany, Lichtenstein, Luxembourg and Austria to take 70% in the 400MW Bard Offshore 1 project in the North Sea. The company announced its final decision to acquire the stake on July 15. The other 30% of Bard Offshore 1 is owned by WV Energie Frankfurt, which in turn is 50% owned by 200 communally owned companies.

Turnkey implementation of the project is by Bard Engineering, which is also supplying the 5MW turbines. The project site lies roughly 100 kilometres north-west of the island of Borkum. Full commissioning is due at the end of 2011. Output should amount to about 1.6TWh, equivalent to the annual electricity needs of around 1.2 million people.

Another group of municipal companies, Thuga, is founding a renewable energy firm that will become involved in offshore wind. About 40 of Thuga's 90 or so member companies are participating in the new company. The new firms will invest in offshore and onshore wind stations, Thuga announced in July. About EUR1 billion in equity and debt will be invested up to 2020.

Investors seem to like Thuga's plans. A EUR200 million bond issued on the capital markets was three-times oversubscribed and subsequently raised to EUR300 million.

Taking another approach, Stadtwerke Munchen, the large municipal energy company for Munich, intends to acquire its third stake in an offshore wind station, which would raise its offshore interests to 466MW. On July 20 it announced signatures to a letter of intent to acquire a 49% stake in Swedish state-owned Vattenfall's 80-turbine German Dan Tysk project, which is to be located 70 kilometres west of the island of Sylt.

Assuming the project uses 5MW turbines, the Stadtwerke's share would amount to 196MW. If the final investment decision is taken in autumn 2010 as expected, the first turbines should be commissioned in 2015.

Spreading its offshore risks geographically, and in terms of distance from shore, earlier this year Stadtwerke Munchen took a 30% stake - equivalent to nearly 173MW - in the project company for the 576MW Gwynt y Mor, to be built just 13 kilometres off the coast of Wales in the UK. Construction should begin in 2011, with completion due in 2014. The majority stakeholders is Germany's RWE with 60%. Siemens, which will supply the turbines and build the cable to shore, holds 10%.

Stadtwerke Munchen's earliest venture into offshore was in January 2009, when it acquired a 24.9% stake in the Wetfeet Offshore Windenergy company, which is developing the 400MW Global Tech 1 offshore station about 100 kilometres off the German coast that could start generating power in 2015. The other stakeholders are the Swiss EGL, German utility Sudhessische Energie and the founding companies FC Holding and Norderland.

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